Budget 2024: After the results of the Lok Sabha elections, many senior journalists and analysts believed that the pain of the common man was reflected in the election results. During the Manmohan government, when the people troubled by inflation and corruption had expectations from the BJP government, the first big expectation was relief from taxes.
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After this, GST was implemented under the leadership of the then Finance Minister Arun Jaitley, but there are still many types of confusions on it. Even the employed middle class has not got anything special from this government.
10 years of Modi government and tax
The last 10 years of the Modi government have seen several policy changes to streamline the tax structure, increase compliance and promote transparency. These reforms were aimed at simplifying the tax system, curbing tax evasion and expanding the tax base. Here are some of the major tax reforms of the Modi government.
1. Goods and Services Tax (GST):
GST was implemented in July 2017. It is considered the biggest and major step for tax reform. GST merged various state and central taxes into a single tax, thereby implementing a uniform tax system across the country. GST simplified India’s tax structure and made it easier for traders to understand and implement it.
How did the tax system become easier through GST
GST earlier organized 17 local taxes and 13 surcharges levied in the country into a five-layer system, thereby simplifying the tax system. Under this, the turnover limit for registration became Rs 40 lakh for goods and Rs 20 lakh for services. Under VAT, this limit was above Rs 5 lakh on an average.
There are many benefits of GST
GST, introduced seven years ago, has made tax compliance easier and increased tax collection, which has led to an increase in the revenue of the states. According to government data, GST has increased the tax buoyancy to 1.22 during the year 2018-23, which was 0.72 before GST. Despite the abolition of compensation, the tax buoyancy of the states remains at 1.15.
After GST, the actual revenue of the states has come down to Rs 46.56 lakh crore, otherwise without GST, the revenue of the states from the financial year 2018-19 to 2023-24 would have been Rs 37.5 lakh crore.
2. Changes in income tax slabs
In 2020, the government announced an alternative tax system with lower tax rates and no exemptions and deductions. This gives taxpayers the opportunity to choose the option that suits them. In different financial years, some changes were also made in the income tax slabs and rates.
3. Digitisation and e-filing
In the last 10 years, the Modi government has made tax return filing easier through online and digital means. The use of e-filing, e-way bill, and other digital tools has been increased in these years. In today’s time, taxpayers need minimal physical presence for tax-related work, which has increased transparency and convenience.
4. Dispute to Trust Scheme
The Vivaad se Vishwas scheme was introduced by the Central Government to resolve tax related disputes, under this scheme taxpayers could settle disputes by paying their outstanding taxes. This helped the government to earn more revenue and also resolved pending tax cases.
Who got the benefit of this scheme
This scheme was applicable on those tax cases which were pending in Commissioner (Appeal), Income Tax Appellate Tribunal, High Court or Supreme Court till 31 January 2020. Let us tell you that all the pending cases were related to tax, dispute, penalty and interest.
5. Curbing benami property and black money
The Benami Property Transactions (Prohibition) Act, 1988 was amended and made stricter. Not only this, the decision of demonetisation was also taken with the objective of bringing out black money and increasing the tax base.
6. Reduction in corporate tax rates
The Modi government has made significant changes in corporate tax rates, aimed at encouraging investment in the country, boosting economic growth and increasing the competitiveness of Indian industries.
In September 2019, Finance Minister Nirmala Sitharaman announced a historic cut in corporate tax rates. In this announcement, tax for old companies was reduced from 30 percent to 22 percent. Whereas for new manufacturing companies, it was reduced from 25% to 15%. This exemption was given to those companies which were established after 1 October 2019 and started production by 31 March 2023.
Apart from this, MAT rate was also reduced from 18.5% to 15%, which gave further relief to the companies.
Big announcement from Modi government on tax
In India, the NDA is going to present the first budget of its third term on July 23. The Modi government has made many important tax related announcements in different budgets since 2014.
In the financial year 2014-15, Nirmala Sitharaman increased the personal income tax exemption limit from 2 lakhs to 2.5 lakhs. Whereas the exemption limit for senior citizens was increased from 2.5 lakhs to 3 lakhs.
In the same budget session, the investment limit under section 80C was increased from 1 lakh to 1.5 lakh. Not only this, the exemption limit of interest on home loan was increased from 1.5 lakh to 2 lakh.
2015-16 Budget
In the budget session 2015-16, it was announced to increase the limit of health insurance premium under section 80D from Rs 15,000 to Rs 25,000. Along with this, this limit was increased to Rs 30,000 for senior citizens.
This year, the Gold Monetization Scheme was launched. Under this scheme, people could deposit their gold in the bank and earn interest.
2016-17 Budget
In this year’s budget session, up to 40% of PF withdrawal was made tax free. An additional exemption of up to Rs 50,000 was given for home loans under Section 24. This year, the Dispute Settlement Scheme was launched so that small tax disputes could be settled.
2017-18 Budget
This year, GST i.e. Goods and Services Tax was implemented in the country, which integrated various indirect taxes. The tax rate on income between Rs 2.5 lakh and Rs 5 lakh was reduced from 10% to 5%. In this budget session, a new surcharge of 10% was imposed on income between Rs 50 lakh and Rs 1 crore and 15% on income above Rs 1 crore.
2018-19 Budget
This year, the 3% education cess was changed to 4% “Health and Education Cess”. At the same time, a standard deduction of 40,000 was announced, which provided great relief to salaried taxpayers. Apart from this, the exemption limit of interest income for senior citizens was increased from 10,000 to 50,000 in this budget session.
2019-20 Budget
This year, full tax exemption on income up to Rs 5 lakh was announced under Section 87A. Tax benefits were also announced for startups, giving them 100 percent tax exemption for three years.
In this budget session, the corporate tax rate was reduced from 30 per cent to 25 per cent for companies with annual turnover up to Rs 250 crore.
2020-21 Budget
This year, an optional new tax regime was announced, with lower tax rates but no exemptions and deductions: 0% on income up to Rs 2.5 lakh, 5% on Rs 2.5-5 lakh, 10% on Rs 5-7.5 lakh, 15% on Rs 7.5-10 lakh, 20% on Rs 10-12.5 lakh, 25% on Rs 12.5-15 lakh, and 30% on income above Rs 15 lakh.
2021-22 Budget
In this budget session, senior citizens, i.e. senior citizens above 75 years of age, who receive only pension and interest income, were exempted from filing income tax returns.
At the same time, various announcements were made to provide relief to small and medium enterprises.
2022-23 Budget
In this budget session, a 30 percent tax was announced on virtual digital assets (cryptocurrency and others). 1% TDS was announced on the transfer of digital assets. At the same time, the rate of surcharge on long term capital gains was limited to 15%.
What is expected in Budget 2024
This time the people of the country are hopeful that the government may make some announcements for the middle class. The salaried class people of India also have a lot of expectations from this budget, because for a long time the common people have not got any relief on the tax front.
If the government reduces the tax burden on the middle class people, then the expenses of the common man can be reduced and his savings can increase. People whose annual income is more than Rs 15 lakh can get tax exemption. These changes can probably be made in the new tax system. In this system, 5 to 20% tax is levied on income up to Rs 15 lakh. Whereas 30% tax has to be paid on income above Rs 15 lakh. However, these are just expectations right now.
The government can also consider reducing some tax rates for those earning Rs 10 lakh annually. Also, it can decide to increase the income limit for which the maximum tax of 30% is levied in the old tax system. Because when a person’s income increases from Rs 3 lakh to Rs 15 lakh, the tax levied on him becomes six times more, which is very high.
Apart from this, the one thing that everyone is eyeing is the demand to increase the limit of standard deduction. As per the current rules, a standard deduction of Rs 50,000 is available for salaried people, which can be increased to Rs 1 lakh in this budget. This step will directly benefit the salaried class.
The common people of the country have a lot of expectations from this budget on home loans. In fact, it is expected that in this budget, home loan borrowers will be given more relief under the Income Tax Act. This will be a big relief for those who are planning to buy a house in the coming time.
